St George IT jobs on the line

Westpac's potential cuts to St George come on top of more than 500 jobs eliminated already this year. Photo: Glen Hunt

Up to 200 jobs at Westpac subsidiary St George face the axe as the bank considers outsourcing work in its information technology department.

The number of jobs on the block comes in addition to the 560 positions that have already been cut from Westpac's ranks so far this year. Westpac bought St George in 2008. The work would be outsourced to IBM.

"This is still just a proposal that is being reviewed," said St George Bank spokeswoman Christina Efthymiades.

"Should we decide to proceed with the transfer of St George IT infrastructure to IBM, our aim is to ensure all affected employees will continue to be employed by IBM or by us."

St George described the 200-position figure as "speculative".

Westpac later said that no employee would be laid off if the bank decides to send the jobs to IBM.

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"Should we proceed with any changes, jobs will remain in Australia and there are no plans for redundancies," said Westpac General Manager of service delivery infrastructure Gary Sim.

"The aim would be for staff to transfer across to our service provider and stay within the St George office," he said. "If we go ahead, no employee would be worse off."

St George employees have been expecting an announcement for weeks after rumours circulated that the bank would transfer its IT to IBM.

BusinessDay understands that weeks ago, staff confronted their managers over the concerns. The managers then organised a so-called "town hall" meeting, which was held on March 28. At the meeting, staff were informed of the potential change but were given no specifics regarding timing, scope or the conditions of future employment.

"Staff were informed that management had formed the view that the current in-house IT operation at St George no longer fit Westpac's service delivery model,'' said one St George IT staff member who asked not to be named.

"We were further informed that a process of discovery and due diligence had been in place for some time with a view to the possible transfer of the St George IT operations to IBM,'' he said.

"That process was now well advanced with management to consider a number of proposals from IBM before Easter with the end decision to be announced the week after Easter."

No announcements have been made.

A second compulsory "town hall" meeting was held on Monday, where the 200 St George employees were told that there was still a "discovery" phase about what will happen to the jobs.

The Finance Sector Union was unavailable for comment.

Revelations of further lay offs come at a sensitive time for Westpac and the banking industry. In March, Westpac was forced to back down on demands that soon-to-be laid off IT workers brief their replacements on how the bank's computer systems operated, an internal document confirms.

Westpac announced in February that it would cut costs by shedding 560 positions and confirmed that its staff headcount would be lower by the end of 2012, as it tried to gain efficiencies between the merged banks.

Australia's banking sector is expected to trim jobs this year as a way of propping up margins in a slower domestic economy. ANZ said in February it would cut about 1000 jobs to respond to the slowing credit environment.

Westpac posted a full-year profit of $6.9 billion in the year to September with earnings of $1.4 billion in the final three months of 2011.

While Westpac and ANZ have outsourced work which has seen some positions go overseas in recent years, Commonwealth Bank chief Ian Narev recently said his bank had little interest in doing the same.

Mr Narev said the cost savings from offshore outsourcing was not worth the operational risk or the negative impact on customer service.